(ValueWalk) We’re three months into the pandemic lockdown, and the real estate industry is frozen in place.
It’s a strange and unprecedented crisis— the fundamentals are unchanged, but both supply and demand basically evaporated overnight, as sellers pulled their listings, and cash-strapped buyers hunkered down.
The most important questions are: how long will this market freeze last, and will there be lasting effects after the pandemic lockdown is lifted?
A new study by Clever Real Estate surveyed sellers, buyers, and renters, to get a sense of their feelings regarding buying and selling in the future, and how their finances are doing as the lockdown drags on. Their findings suggest that, even if the lockdowns are lifted soon, the financial and psychological damage wrought by the pandemic might take a lot longer to heal.
Clever has conducted a consumer survey each of the last two months, and this latest survey showed that, for most Americans, their financial situation has continued to decline as the lockdown enters its third month.
Many people are now confronting basic, nearly existential concerns; 50% of respondents, for example, are worried about whether they’ll be able to feed their family. Among homeowners, 56% said they were worried about running out of savings, 51% were worried about their ability to pay basic, everyday bills, and 33% were worried about being able to make their mortgage payments.
With worries like these, there’s simply no bandwidth left for thinking about selling a home.
It’s no better for likely prospective buyers. In line with historic trends, renters are doing far worse than homeowners. A shocking 45% of renters have less than $500 in emergency savings, making them 2.5X more likely than homeowners to have very little money in the bank, and 5.5X more likely to have no savings at all.